THE prosecution of a Merseyside man accused of laundering drug money collapsed yesterday because police embarked on a "state-created crime".

The prosecution of Michael Roper, 37, from Whiston has been "permanently stayed" after a trial against him and nine other defendants was thrown out at an estimated cost of &#xA3;25m to the taxpayer.

Judge George Bathurst-Norman at London's Southwark Crown Court said an undercover police operation in which &#xA3;15m was laundered then returned to suspected drug dealers was a "honeypot" and "massively illegal".

The ruling followed a 418-day marathon of court hearings and stop-start legal arguments spanning five years.

Operation Cotton was launched 14 years ago and aimed at alleged drug barons using Gibraltar and other routes to launder seven-figure profits.

A company, set up with Scotland Yard approval, came complete with bogus financial records filed by accountants who were granted immunity from prosecution.

The result was a "very tempting package" designed to trap as many "targets" as possible.

Once "cleaned up", the suspect sums were handed back to bolster the operation's carefully-crafted fiction and allow police to continue gathering evidence.

Mr Roper, a self employed businessman, was charged on September 10 with two counts of conspiracy to launder the proceeds of drug trafficking.

A statement released after yesterday's hearing by his Liverpool-based solicitor, Andrew Pearson, said: "It is of particular relief for my client, who has always vigorously protested his innocence. The strain on Michael and his family has almost been unbearable."

Mr Pearson, of Pearson Fielding Partnership in Stanley Street, said he had spent thousands of hours poring over evidence which was undisclosed to the court to piece together the extent of the police's sting.

"This raises really important questions because since the 1996 Criminal Investigation and Procedure Act the police assess what is relevant to the defence and what might undermine a prosecution. That situation is perverse and in my view will lead to many miscarriages of justice."

The court heard that high profile Gibraltan lawyer Christopher Finch and businessman Plinio Bossino, 63, of Streatham Court, Streatham, south west London were regarded as principal players in the alleged criminality.

The judge said any criticisms levelled at the police were based on their "incompetence" - there was no question whatsoever of bad faith.

Metropolitan Police deputy assistant commissioner Bill Griffiths said the ruling would have "serious implications" for the future of undercover policing.